Summer letters illustrate Xcel/Boulder rift

BOULDER – Letters exchanged between the city of Boulder and Xcel Energy Inc. last summer illustrate the differences that led to Xcel filing with the PUC a request to modify its energy-efficiency and renewable-energy programs for Boulder customers.

The letters were obtained by the Boulder County Business Report on Wednesday.

Xcel’s filing with the Public Utilities Commission on Tuesday seeks to limit the amount of new incentives paid out to its Boulder customers through the programs between now and the time the city begins operating its own electric utility. Boulder earlier this month sent Xcel a notice of intent to acquire by the power of eminent domain the company’s assets and infrastructure necessary to form a utility.

Since all Xcel customers pay into the incentive programs through riders on their bills, Xcel said it doesn’t want its non-Boulder customers to be subsidizing the renewable-energy benefits that would eventually be enjoyed by the city’s utility.

In its filing, Xcel noted that it would drop the application with the PUC if the company and the city could agree to terms on how the city would compensate Xcel when Boulder forms its utility. Boulder officials have long said they’re interested in reaching such an agreement if Xcel could provide it with detailed information related to the company’s contracts with customers and how much assuming the contracts would cost.

City officials say the information Xcel has provided so far is not detailed enough. Xcel disagrees.

In a letter sent to city manager Jane Brautigam and city attorney Tom Carr on Aug. 22 last year, Xcel attorney Paula Connelly outlined what Xcel believed the costs would be for Boulder to assume any new rebate and incentive contracts signed between the company and Boulder customers from Oct. 1 to when the city begins operating its utility. Sorting out potential compensation or transferring of contracts signed before then would be hashed out in condemnation court.

Since most of its Solar Rewards incentives for residents with solar panels are paid out over 20 years, Xcel is requesting that Boulder take over those contracts once its utility is operating. The cost of doing so, Xcel said in the letter, would be about $496,000 annually. That’s based on the number of new contracts the company anticipates signing with Boulder customers given past participation levels. The actual amount could be more or less depending on how many new customers sign up.

For demand-side management programs – such as rebates for installing energy-efficient appliances that are usually doled out at the time of purchase – Xcel’s letter stated that it collected $2.8 million in 2011 and $3.5 million in 2012 from Boulder customers for the programs. The amount the company says it paid out to participating Boulder customers in those years, however, was $4.6 million in 2011 and $4.8 million in 2012. Had the city agreed to pick up the difference in those years – like Xcel is requesting the city do for new DSM contracts signed from this point forward – that cost would have been $1.8 million in 2011 and $1.3 million in 2012. Those aren’t the amounts Xcel is requesting in a potential deal with the city but rather were intended to give the city an idea of what the costs of such an agreement would be.

“They know, based on what we’ve given them, what their spending is each year for each of those programs and the participation level,” Xcel spokeswoman Michelle Aguayo said Wednesday. “That’s what they need to know.”

The city disagrees.

“They seemed to us to be potentially inflated numbers, and we needed additional numbers to be able to do calculations and verify them,” Boulder spokeswoman Sarah Huntley said.

In response to Xcel’s Aug. 22 letter, the city sent a letter on Sept. 9 that requested much more detail about how Xcel calculated those estimates. Among other things, the city requested to see all Solar Rewards contracts executed by Xcel with Boulder customers since the program began so that the city could independently analyze the potential costs of new contracts. The city also wanted a detailed accounting of Xcel’s DSM revenues for the same years to verify how Xcel came up with the figures for what it portrayed as an excess benefit to Boulder customers.

Xcel denied those requests.

“We’ve been unable to get any kind of information (when asking for further documentation),” Huntley said.

Aguayo said the information on past contracts is unnecessary given that any agreement between the two sides would only cover new contracts signed from now until Boulder forms its utility. The information provided in the Aug. 22 letter was what is relevant, she said.

Given there’s no agreement, Xcel went ahead and filed the application with the PUC to modify its programs for Boulder customers.

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